With just months until the first Making Tax Digital (MTD) deadline, new research from Sage – a global leader in accounting, financial, HR and payroll technology for SMBs – and IPSE, an association for the self-employed, reveals that 70% of UK sole traders still aren’t aware the change is coming.
The first phase, which is the biggest to self-assessment in almost 20 years (April 2026), will require sole traders to keep digital records and submit quarterly updates to HMRC using approved accounting software.
But the report From Spreadsheets to Software: Supporting Sole Traders Through Making Tax Digital for Income Tax, shows most still rely on manual methods with 77% saying they are comfortable with their current way of tax reporting – revealing a major barrier to wanting to adopt digital tools.
The research shows that: only 10% use cloud-based accounting software, 66% use spreadsheets, 56% rely on bank statements and 33% still track income and expenses with pen and paper.
Using digital tools can make running a business far simpler for sole traders. Those already using them report clear benefits including better financial visibility (53%), stronger cashflow control (48%) and reduced stress. While 74% say receiving quarterly tax bill estimates would help them plan ahead.
